Home /
A discrete choice model for large heterogeneous panels with interactive fixed effects with an application to the determinants of corporate bond issuance

A discrete choice model for large heterogeneous panels with interactive fixed effects with an application to the determinants of corporate bond issuance

Working papers set out research in progress by our staff, with the aim of encouraging comments and debate.

Published on
20 January 2017

Working Paper No. 640
By Lena Boneva and Oliver Linton

What is the effect of funding costs on the conditional probability of issuing a corporate bond? We study this question in a novel dataset covering 5,610 issuances by US firms over the period from 1990 to 2014. Identification of this effect is complicated because of unobserved, common shocks such as the global financial crisis. To account for these shocks, we extend the common correlated effects estimator to settings where outcomes are discrete. Both the asymptotic properties and the sample behaviour of this estimator are documented. We find that for non-financial firms, yields are negatively related to bond issuance but that effect is larger in the pre-crisis period.

Visiting the museum

We have placed cookies on your device to help make this website better

Some of the cookies we use are essential for the site to work (for example, to manage your session). We also use some non-essential cookies (including third party cookies) to help us improve the site. By clicking ‘Accept’ on this banner, or by using our site, you accept our use of cookies. You can also view our Cookies statement and learn how to control or disable them.